2000/145
9 pages
ROYAL COURT
(Samedi Division)
24th July 2000
Before: J. G. P. Wheeler, Greffier Substitute
Between Daniel Benedict McCann First Plaintiff
And Anthony Edwin Groves Second Plaintiff
And Johannes Lambertus de Geoij Third Plaintiff
And Theodora Clementina Helena Maria Fourth Plaintiff
de Geoij née Bellman
And Clanbrassil Trust Company Fifth Plaintiff
And AIB Bank (CI) Limited Defendant
Application by the Defendant to strike out the Plaintiffs' Order of Justice
Advocate C G P Lakeman for the Plaintiffs
Advocate A R Binnington for the Defendant
JUDGMENT
THE GREFFIER SUBSTITUTE:
1. This is an application by the defendant to strike out the Order of Justice in this action in its entirety. The alternative grounds on which the striking out is sought are that the Order of Justice discloses no reasonable cause of action and/or it is scandalous, frivolous or vexatious and/or it is otherwise an abuse of the Court. In support of the strike out application (although by virtue of Rule 6/13(2) evidence is not admissible in relation to a striking out on the grounds that a pleading discloses no reasonable cause of action) the defendant has filed an affidavit sworn by Mr Jeremiah Fintan Lynes, its managing director. The application is resisted by the plaintiffs who in turn have filed an affidavit sworn by Daniel Benedict McCann, the first plaintiff, on his own behalf and on behalf of the other plaintiffs.
2. Before looking at the pleadings in this action and the strike out application it is appropriate to put the present proceedings into context. There have already been before the Royal Court two sets of proceedings related directly or indirectly to the subject matter raised in the present Order of Justice. All three sets of proceedings have some connection with the delivery of American securities by a company called Medos Investments Limited ("Medos") to a New York broker for the account of the defendant and the defendant's subsequent failure to advise Medos of their delivery. These events occurred back in October 1987.
3. What I shall call the "First Action" was commenced by Order of Justice dated 11th July 1991 (which was subsequently amended on a number of occasions) and in which Medos sued AIB Bank (CI) Limited ("AIB"), the defendant in the present case. The Order of Justice states that Medos was the owner of a portfolio of US securities and Medos was administered by Clanbrassil Trust Company (the fifth plaintiff in the Present Action), the principal and a director of which was Mr McCann, the first plaintiff in this action. In September 1987 Clanbrassil, acting on behalf of Medos, agreed to deliver US securities to a form of brokers in New York for the account of AIB with a request that Medos be advised when delivery was made. The Order of Justice states that by virtue of these arrangements a contract was established between Medos and AIB. Medos then alleges that AIB failed to advise immediately when the securities were in a deliverable state and as a result Medos suffered loss and damage.
4. Although the claim of Medos in the Order of Justice in the First Action is primarily founded in contract it does also allege that AIB was negligent (see paragraph 12 of the Order of Justice) and goes on (in paragraph 15) to say that by reason of AIB's breach of contract and/or negligence and/or negligent advice the plaintiff has suffered loss and damage. On the face of it, therefore, it does appear that the claim of Medos is founded in both contract and tort. This seems to be acknowledged in the Answer filed on behalf of AIB because in paragraph 12 of that Answer AIB avers that the claim of Medos in negligence is prescribed by law in that proceedings were not instituted within the relevant three year limitation period.
5. The hearing of the First Action commenced before the Royal Court on 19th April, 1993. Following the hearing of all the evidence in the case but before the Royal Court delivered its judgment Medos and AIB settled their differences. This apparently occurred on 26th April 1993 and the settlement agreed was the payment of £85,000 by AIB to Medos in full and final settlement of the First Action.
6. Matters rested there until almost three years later. Then, on 18th April 1996, Medos instituted new proceedings against five defendants who are the plaintiffs in the Present Action. It should be noted that these new proceedings (which I shall refer to as "the Second Action") did not concern AIB.
7. A number of claims were made in the Order of Justice in the Second Action. It was alleged by Medos that the First Action had been settled by the defendants in the Second Action contrary to instructions and/or at an inappropriate figure and therefore the defendants were in breach of the duties they owed Medos under Liberian law or in breach of trust. It was alleged, in addition, that the defendants in the Second Action had acted in breach of contract or in breach of their duties as directors or trustees in dealings with the US securities which belonged to Medos. There were also two separate claims regarding loans which had been made to Medos in 1989 and 1991. On reading the Order of Justice in the Second Action it seems, on the face of it, that only the first claim mentioned has any direct connection with the subject matter of the First Action.
8. The Second Action came on for trial before the Royal Court in October 1997. After some only of the evidence was heard and before any judgment was delivered the Second Action was compromised by an agreement by the plaintiffs to pay to Medos the sum of £119,000 together with interest and a contribution to costs.
9. I now turn to the current proceedings which I shall refer to as "the Present Action." The plaintiffs in the Present Action were the defendants in the Second Action and the defendant AIB was the defendant in the First Action. The Order of Justice in the Present Action describes the settlement of the Second Action. It then goes on to claim that AIB is a joint tortfeasor and is therefore liable to indemnify or make a contribution to the sum paid by the plaintiffs in settlement of the Second Action. This claim is made pursuant to Article 5 of the Law Reform (Miscellaneous Provisions)(Jersey) Law, 1960 ("the 1960 Law"). The Order of Justice in the Present Action refers again to the events in October 1987 which formed the basis of the First Action although it describes them more specifically in terms of tortious liability.
10. The provision of the 1960 Law on which the plaintiffs in the Present Action rely is Article 5(1)(c) which is in the following terms:-
"(1) Where damage is suffered by any person as a result of a tort (whether a crime or not)-
(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether the joint tortfeasor or otherwise, so however that no person shall be entitled to recover contribution under this Article from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought."
11. The summons seeking to strike out the Order of Justice in the Present Action in its entirety came before me on 5th July, 2000. The summons seeks to strike out on the grounds that the Order of Justice discloses no reasonable cause of action and/or it is scandalous, frivolous or vexatious and/or it is otherwise an abuse of the process of the Court.
12. Advocate Binnington on behalf of AIB contends that in order successfully to claim a contribution or indemnity under Article 5(1)(c) of the 1960 Law the plaintiffs in the Present Action will have to show that:-
(1) damage has been suffered by Medos as a result of a tort;
(2) that the plaintiffs in the Present Action are tortfeasors;
(3) that the plaintiffs are liable in respect of the damage suffered;
(4) AIB is a tortfeasor; and
(5) AIB as tortfeasor is, or would if sued have been, liable in respect of the same damage.
13. Advocate Binnington argues that the plaintiffs in the Present Action and AIB are not joint tortfeasors and the plaintiff's claim cannot, therefore, succeed. In relation to the First Action he contends that this was brought by Medos against AIB in contract with the claim being founded on the breach of an express term of that contract (namely the failure of AIB to notify Medos once its securities had been received and were in a deliverable state) and the breach of an implied term that AIB would carry out its duties under the contract with the care and skill expected of a reasonably prudent investment banker.
14. Advocate Binnington urged that as the First Action was based on contract it would not be correct to search, in addition, for a tortious relationship between the parties. In support of that contention he referred me to the case of Stanton Limited and Another -v- D. O. Moon and Others (4th March, 1994) Jersey Unreported and the citation in that case by the Royal Court with apparent approval of the decision of the Privy Council in Tai Ming Cotton Mill Limited -v- Liu Chong Hing Bank Limited and Others (1985) 2 All ER 947. He drew my particular attention to pages 6-8 of the judgment in the Stanton Limited case in this regard.
15. Having reviewed the pleadings in the First Action I am not convinced that the Order of Justice does limit the claims by Medos against AIB only to contract. Paragraphs 12 and 15 of the Order of Justice in the First Action do refer to negligence and although a specific duty of care is not actually pleaded, I think it can be said that the claim is at least partially founded in tort as well as contract. This seems to have been at least tacitly accepted by AIB because in the Answer filed in the First Action it raises the question of prescription which can only be applicable to a claim in tort not contract.
16. Advocate Binnington went on to refer to the Order of Justice in the Second Action brought by Medos against the five defendants who are the plaintiffs in the Present Action. The claims by Medos in the Second Action are for:-
(a) breach of Liberian statutory duty;
(b) breach of implied terms of the defendant director's contracts of engagement;
(c) breach of trust; and
(d) breach of an implied term of Clanbrassil's contract with Medos.
He contended that none of the allegations contained were founded in tort. Furthermore, the allegations were considerably wider than those made in the First Action and were of a totally different nature. He argued that as neither action was framed in tort and totally different allegations were made in each one, AIB could not possibly be a joint tortfeasor with the plaintiffs in the Present Action. He therefore argued that the Order of Justice should be struck out on the ground that it disclosed no course of action.
17. On reviewing the pleadings in the First Action and the Second Action I have come to a number of conclusions. I do consider that the Order of Justice in the First Action does contain certain allegations which can properly be regarded as arising in tort. Mr Binnington's arguments carry more weight in relation to the Second Action. It may be that breaches of a Liberian statute could amount to a tort although, as Mr Lakeman contended, this is not something for me to decide but a matter which would have to await any full trial of the Second Action. The other claims seem without doubt founded on totally different grounds of law, namely breaches of contract and trust. Even if the claim for breach of Liberian statutory duty were found to be tortious I cannot see how in any circumstances AIB could be regarded as a joint tortfeasor with the plaintiffs in the Present Action.
18. In the course of his address Advocate Binnington drew my attention to a Report of the Law Commission in the United Kingdom made in March 1997. In that Report the Law Commission had considered the difficulties which had arisen under the Law Reform (Married Women and Tortfeasors) Act 1935 in the United Kingdom. Article 6 of that Act is in similar terms to Article 5 of the 1960 Law in Jersey. He drew my attention to extracts from the Report which showed the problems which had arisen in the United Kingdom with particular reference to circumstances where two actions were settled or a party was adjudged to be liable otherwise than in tort. As a result of these problems the Law Commission had recommended that the 1935 Act be amended to overcome the particular problems addressed. No such amendments have been made in Jersey to the 1960 Law.
19. Mr Binnington went on to contend that if his contentions for striking out on the grounds that the Order of Justice disclosed no cause of action failed there were alternative grounds on which the Order of Justice should be struck out as scandalous, frivolous or vexatious and/or otherwise an abuse of process. He drew my attention to the fact that even if the allegations in the Second Action were framed in tort, the plaintiffs in the Present Action would have to argue totally contrary to their arguments in the Second Action. They would have to argue that they would have been held liable in tort if the Second Action had proceeded to the end of a trial and judgment. In the Second Action liability had, of course, been denied. He referred to this as a "bizarre result" and drew my attention again to the Report of the Law Commission in the United Kingdom which had considered this particular question. Mr Binnington went on to contend that if the Present Action went to trial the fact that no judgment was issued in either the First Action or the Second Action effectively meant that both sets of proceedings would have to be re-litigated in order to determine the matters in issue in the Present Action. Those events took place as long ago as 1987 and he argued that AIB would find themselves placed at a considerable evidential disadvantage, both because of the fact that events took place 13 years ago, and as to the potential availability of witnesses.
20. He also argued that, because Article 5(2) of the 1960 Law requires liability to be apportioned between alleged joint tortfeasors, it is perfectly possible that a Court hearing the Present Action might regard the contributions which had already been made as appropriate. He pointed out that the first plaintiff in the Present Action, Mr McCann, was a "common thread" between all the actions. He had been instrumental in agreeing the settlements in both the First Action and the Second Action, and it could properly be argued that the parties, in agreeing the settlements, regarded the contributions made by way of settlement as appropriate. Mr Binnington contended that it was an abuse of process to seek to have matters re-litigated for a third time simply in the hope that this might lead to a re-adjustment of the proportions paid under the two settlements.
21. Finally, Mr Binnington sought to rely on the maxim "interest reipublicae ut sit finis litium" i.e. that it is in the interest of the State that there should be an end to lawsuits. On this principle, when a question has once been fairly tried and determined between two parties, the law does not permit them to raise another suit involving the same question. In support, he cited the case of T. A. Picot (CI) Limited and Another -v- Richard John Michel and Others (5th November, 1993) Jersey Unreported where the Court said at page 10 of the judgment:-
"Here the question had come to Court, had been disposed of and could not now be re-opened. To do so would merely permit the Plaintiffs to relitigate, in a manner doubtless more convenient to themselves, an action which had been disposed of with an Order of the Court of the Inferior Number. Hard though it might be on the Plaintiffs, the Court should not allow the action to be re-opened, albeit between different parties."
22. Advocate Lakeman, on behalf of the plaintiffs, took issue with all the arguments raised on behalf of the defendant. In coming to my decision I have taken into account all the arguments put forward by Mr Lakeman but need only refer in this judgment to some of those arguments.
23. With regard to the Order of Justice in the First Action, Mr Lakeman contended that the Order of Justice did contain, at least in part, claims founded in tort. He drew my attention, in particular, to paragraphs 12 and 15 of the Order of Justice which he submitted contained pleadings in tort. He contended that AIB owed concurrent duties in contract and tort which could both give rise to liability. For the reasons previously stated I accept that the Order of Justice in the First Action does contain claims founded both in contract and tort.
24. Mr Lakeman also urged that the Second Action is quite capable of being regarded as brought in tort. He accepted that in order to answer this question it would be necessary for expert Liberian evidence to be called but this was not something which should be done at an interlocutory stage, but should await the full trial of the action. Whilst I can see the merit of this line of argument I do not see how, even if the breach by directors of a company of Liberian statutory duty in the Present Action was tortious it could possibly involve AIB as a joint tortfeasor.
25. Mr Lakeman also contended that the Order of Justice in the Present Action does relate back to the question of the delivery of US securities in 1987. He accepted that what the plaintiffs were seeking was a re-distribution of the quantum of liability in the First and Second Actions by invoking Article 5 of the 1960 Law. He argued that it was perfectly proper to bring a separate action in this regard, and there had been no obligation on the part of the plaintiffs in the Third Action to convene AIB as a third party in the Second Action. He pointed out that the Second Action had only been compromised in 1997 and there was nothing unusual in seeking a contribution or indemnity by way of a subsequent action. Such a step could not, therefore, be regarded as an abuse of process of the Court.
26. Mr Lakeman conceded that there were various claims in the Order of Justice in the Present Action which a Court could regard in any event as not being matters in respect of which AIB could or should be held liable as a joint tortfeasor. He submitted, however, that it would be quite possible to limit any contribution or indemnity to only some of the claims in the Order of Justice.
27. Advocate Lakeman also took issue with the contention put forward on behalf of the defendant that a new case some 13 years or more after the events complained of had occurred would present great evidential difficulties to the prejudice of AIB. He considered it inappropriate for the Court to be invited to make too many presumptions on evidential matters, but he considered that the plaintiffs would be available to give evidence and this was not a matter which should present great difficulties.
28. The First Action, by way of Order of Justice, was brought be Medos against AIB and I find that on the face of that Order of Justice the claim of the plaintiff is founded both in contract and in tort. This is at least tacitly accepted by AIB by raising the question of prescription in its Answer. The Second Action is much wider in its scope and involves different parties being an action brought by Medos against five defendants who are the plaintiffs in the Present Action. It raises a number of allegations that these are predominantly matters of contract or trust law. The only possible tortious liability which could arise would be as a result of a breach of Liberian statutory duty. I do not need to address specifically the question whether such a breach would be tortious in Jersey. Even if it were I cannot see any basis on which AIB could be held liable as a joint tortfeasor in respect of any such breach.
29. Having regard to the terms of Article 5(1)(c) of the 1960 Law I have come to the conclusion that the plaintiffs cannot avail themselves of any right of contribution or indemnity under that provision which is limited to contribution or indemnity where damage is suffered as a result of a tort and one tortfeasor may recover a contribution from any other tortfeasor. In my view the Present Action does not come within the statutory provision and I find, therefore, that the Order of Justice in the Present Action discloses no cause of action and should be struck out accordingly.
30. In view of my finding, it is not necessary for me to proceed to consider whether the Order of Justice should be struck out on the alternative grounds that it is scandalous, frivolous or vexatious and/or otherwise an abuse of the process of the Court. I do not, therefore, proceed to make any findings on this point. I would, however, observe the fact that as was put to me the "common thread" between all three actions seems to be Mr McCann, the plaintiff in the Present Action. He has been involved in all three actions and in the lay sense appears to have "managed those actions" on behalf of those he represented and for himself. It would also appear that he was the main instigator in settling both the First and Second Actions although I accept that he may have done so when acting in different positions of responsibility. Nevertheless, he apparently had full knowledge available to him to be involved in the settlement of both the First and Second Actions on terms which, presumably, must have been acceptable. He and the other plaintiffs in the Present Action now seek a re-adjustment of the apportionment of liability.
31. For the reasons stated above I order that the Order of Justice in the Present Action be struck out in its entirety on the ground that it discloses no cause of action. Having heard the parties I also order that the plaintiffs pay the costs of the defendant of this application and the action generally on the standard basis.
Authorities
Stanton and Another -v- D.O. Moon and Others (4th March, 1994) Jersey Unreported.
T.A. Picot (C.I.) Limited and Another -v- Richard John Michel and Others (5th November, 1993) Jersey Unreported.
Law Reform (Miscellaneous Provisions)(Jersey) Law, 1960 - Article 5(1)(c).
Tai Ming Cotton Mill Limited -v- Liu Chong Hing Bank Limited and Others (1985) 2 All ER 947.
The Law Commission - Law of Contract Report on Contribution (9th March, 1977) Her Majesty's Stationery Office.